France Telecom Loses Antitrust Appeal at European Court

Europe's top court Thursday threw out an appeal by France Telecom against a 2003 European Commission antitrust ruling that found the company guilty of monopoly abuse in the market for Internet access.

France Telecom was found to have used predatory pricing tactics to squeeze rivals out of the market. The Commission ordered the company to stop and fined it just over 10 million euros.

Wanadoo, then a division of France Telecom, charged residential customers for its eXtense and Wanadoo ADSL services predatory prices because they did not cover its costs from August 2001 until October 2002.

The move successfully forced out competition from the market for high speed internet access during a key phase in its development. Before the 2003 antitrust ruling France had some of the highest prices for broadband Internet access and was a laggard in broadband penetration compared with its European neighbors.

Competition returned to the market after the 2003 Commission ruling, said Jonathan Todd, the Commission's competition spokesman.

"France now enjoys the second lowest broadband Internet access prices of all countries in the Organization for Economic Cooperation and Development (OECD) after Japan.," he said.

He welcomed the ruling by the Court of Justice. "It is an important decision because it confirms the approach the Commission has taken in ensuring fair competition," Todd said.

France Telecom appealed twice against the Commission ruling, first in the Court of First Instance which rejected the appeal in 2007, then in front of Europe's top court.

It argued that Wanadoo wasn't a dominant player at the time of the antitrust abuse. Under E.U. antitrust law when a firm deliberately makes a loss in order to deter other from entering the market, it is only illegal when carried out by dominant firms.

Meanwhile, last month France Telecom fell under fresh scrutiny by the European antitrust regulators when arch-rival Vivendi filed a formal complaint about the way the former French public monopoly competes.

Todd said antitrust officials are still examining the complaint and has made no decision whether of not to launch a formal probe.

Vivendi claims that France Telecom has been abusing its powerful position in the wholesale market for local loop network access to the detriment of rivals by overcharging them for use of this vital portion of France's telecoms infrastructure.